As of 08/20/2019
  Indus: 25,962 -173.35 -0.7%  
  Trans: 10,006 -75.35 -0.7%  
  Utils: 834 -1.95 -0.2%  
  Nasdaq: 7,949 -54.25 -0.7%  
  S&P 500: 2,901 -23.14 -0.8%  
YTD
 +11.3%  
 +9.1%  
 +17.0%  
 +19.8%  
 +15.7%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019
As of 08/20/2019
  Indus: 25,962 -173.35 -0.7%  
  Trans: 10,006 -75.35 -0.7%  
  Utils: 834 -1.95 -0.2%  
  Nasdaq: 7,949 -54.25 -0.7%  
  S&P 500: 2,901 -23.14 -0.8%  
YTD
 +11.3%  
 +9.1%  
 +17.0%  
 +19.8%  
 +15.7%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019

Bulkowski's Falling Wedge

 

Statistics updated on 5/20/19.

For more information on this pattern, read Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns., pictured on the right.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

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The falling wedge is a very poor performer as far as bullish chart patterns go. The break even failure rate is high and the average rise is low. The only variation that works well is a downward breakout in a bear market.

Important Results
Identification Guidelines
Trading Tips
Example
Other Examples
See Also

 

Falling wedge chart pattern

Falling Wedge

Falling Wedge: Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 49 out of 56/19 out of 53
Break even failure rate for up/down breakouts: 26%; 29%
Average rise/decline: 38%; 14%
Throwback/pullback rate: 62%, 74%
Percentage meeting price target for up/down breakouts: 62%, 29%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Falling Wedge: Identification Guidelines

CharacteristicDiscussion
Price trendCan be any direction leading to the pattern.
ShapePrice follows two down-sloping and converging trendlines.
TouchesPrice should touch each trendline at least five times to outline a good pattern. That's 3 touches of one trendline and 2 of the opposite.
Duration3 weeks is the minimum duration, otherwise it's a pennant.
Volume trendTrends downward 75% of the time until the breakout.
BreakoutCan be in any direction but is upward 68% of the time.
ConfirmationThe pattern confirms as a valid one when price closes outside one of the trendlines.

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Falling Wedge: Trading Tips

Trading TacticExplanation Falling wedge chart pattern measure rule
The Measure Rule

Falling wedge chart pattern price dip

Dip

Measure ruleSee the figure to the right. For upward breakouts, the highest peak in the pattern (A) is the price target. Alternatively, compute the height from the highest peak (A) to the lowest valley (B) and then multiply it by the above “percentage meeting price target.” Add it to (upward breakouts) or subtract it from (downward breakouts) the breakout price (the point at which price crosses the trendline, shown here as a blue line) to get a price target, (C).
DipSee the figure to the right. After a downward breakout, price sometimes curls around the front of the wedge and soars upward. The busted pattern presents a profit opportunity from the long side.
BreakoutThe average distance from the breakout is 61% of the way to the triangle apex (where the trendlines join).
ConfirmationWait for a close outside one of the trendlines before taking a position.
GapA gap upward on the breakout day suggest a better performing wedge.
HeightTall patterns perform better than do short ones.
Breakout volumeWedges with heavy breakout day volume perform better.

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Falling Wedge: Example

Falling wedge chart pattern example

The above figure shows an example of a falling wedge chart pattern. After a strong upward trend, the wedge forms, dropping price to 50. Then price breaks out upward and climbs to B, short of the target price of A predicted by the measure rule. Price throws back to the breakout and continues down. This is a good example of why I avoid wedges.

-- Thomas Bulkowski

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Other Falling Wedge Examples

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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